N26 Crypto will allow users to buy and sell 100 tokens including bitcoin and ether.

N26

European digital bank N26 announced on Thursday that it is launching a crypto trading service, starting with Austria as the first market for the product.

The service, called N26 Crypto, is due to be available to Austrian N26 clients in the coming weeks and will initially include 100 tokens including bitcoin and ether. N26 plans to roll out the feature to users in other markets over the next six months and eventually expand its token offering to include a total of 194 coins.

Gilles BianRosa, N26’s chief product officer, told CNBC that the bank’s crypto brokerage feature allows users to “dip their toes into the water in a way that’s not scary.”

To trade, users select a coin and specify how much they want to buy or sell. When they complete their order, money is deducted from their main account balance and appears alongside the token they choose. Customers can also “drag and drop” funds from their main account into their crypto portfolio, or vice versa, N26 said.

Berlin-based N26 is a bit late to the crypto rush. Fintech competitors PayPal and Revolut have long offered their users the ability to buy and sell digital assets, and payment leviathan Visa and Master card their clients also sell crypto and so-called “Web3” services. On Wednesday, Brazilian digital bank Nubank launched its own token, called Nucoin.

“Our users are very interested in crypto,” said BianRosa in an interview. “That interest is still incredibly high, even in a bear market.”

N26’s crypto foray could be better timed. Bitcoin and other tokens have been deep in the red this year after investors fled the market due to fears of higher interest rates and liquidity constraints. While high street banks have steered clear of crypto due to concerns about its high volatility and involvement in fraud, N26 – which has an EU banking license – is dipping its toes into the space in the belief that it’s just “length”. “

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“We want to take a fairly long-term view around this,” said BianRosa. “It’s not like we’re trying to miss the launch of how the market is doing.”

N26 charges a 2.5% fee on buy and sell orders for all cryptocurrencies – except bitcoin, which it offers at a reduced 1.5% transaction fee. For subscribers to its paid Metal accounts, which cost 16.90 euros ($16.54) per month, the transaction fee is 1% for bitcoin and 2% for all other tokens.

The feature is powered by Bitpanda, an Austrian crypto and stock trading app that shares N26 backer Peter Thiel as an investor – with Bitpanda pocketing a commission on every trade processed through N26. N26 said it plans to support trading in other asset types over time.

This move could cause discomfort for regulators, who have become much stricter in their approach to crypto after the $2 trillion market was wiped out this year. The European Union in particular has tried to tackle the “Wild West” of crypto, and the incoming rules are expected to improve investor protections for digital assets. BaFin, Germany’s financial watchdog, has previously placed restrictions on N26’s growth due to alleged failures in its fraud prevention systems.

“We have a very strong working relationship with all the regulators, so obviously we communicate our plans to them, they know and we’ve covered all the regulatory requirements we have for this market,” said BianRosa.

A spokesperson from BaFin said that the company does not comment on individual banks but in general, “the banks must comply with any statutory obligations regarding the prevention of money laundering and also all other banking supervision requirements when doing business with crypto assets.” The Austrian Financial Market Authority, which oversees the market where N26 is initially launching its crypto service, said any questions about the move should be directed to BaFin.

In particular, the N26 crypto service does not include support for custodial wallets, which means that customers cannot transfer their assets from the platform. Platforms like Robinhood and Revolut have recently introduced features that give users more control over their crypto assets.

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BianRosa said this creates a “closed circuit investment loop” where users’ assets are sealed in a controlled environment. It’s a feature that might suggest some of crypto’s biggest proponents are at odds with the technology’s decentralized roots. But N26 argues that this gives its users better protection. Clients must complete identity verification checks before they are eligible to make crypto trades.

“It’s not like you can convert those bitcoins and buy something from the dark web with those assets from your wallet,” said N26’s product chief.

N26 is one of Europe’s largest fintechs, scoring a $9 billion valuation in its most recent funding round last year. However, like other fintechs, the firm is losing money. N26 posted a net loss of 172.4 million euros ($168.8 million) in 2021, a 14% increase from the previous year.



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